Headlines

The Reader's Digest Association Inc. will be able to proceed with its emergence from Chapter 11 now that it has agreed to cut its U.K. unit loose by placing it into insolvency proceedings, Bankruptcy Law360 reported. Read more. (Subscription required.)

Derivative contracts taken out by Italian municipalities could jeopardize local public finances for decades, even though the global financial crisis has softened the blow in the short term, Italy's Audit Court said Wednesday, The Wall Street Journal reported. "Certain debt and imbalances are magnified over time, and may wring sacrifices from future generations for 20 or even 30 years," Mario Ristuccia, the chief prosecutor of the administrative court, said in a speech delivered here.

Dubai World will present a proposal to creditors in March to restructure about $22 billion of debt after its advisers complete valuing the assets of the state- owned company, a person close to the Dubai government said, BusinessWeek reported. The final proposal will be made after consultations with the Abu Dhabi government and the United Arab Emirates’ central bank, said the official today, who declined to be identified because the process is private.

Dubai stocks fell again, though only slightly, and the price of insuring against a default in the city-state rose on Monday, on the second day of market upheaval following news that flagship corporation Dubai World may offer creditors just 60% of the money they are owed as part of a deal to reschedule $22 billion in debt. People familiar with the matter told Zawya Dow Jones that one potential offer being considered in debt-restructuring talks was a repayment offer of 60 cents on the dollar, paid back after seven years, and backed up by government guarantees.

U.K. jobless claims unexpectedly jumped in January to the highest level since Tony Blair led the ruling Labour Party to power almost 13 years ago as the recession destroyed work at businesses from carmakers to banks. The number of people receiving unemployment benefits rose by 23,500 from the previous month to 1.64 million, the highest since April 1997, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 27 economists was for a drop of 10,000. The jobless rate on that basis stayed at 5 percent.

The prospect of an EU intervention in the Greek economy drew a step closer when European finance ministers endorsed a 28-day deadline imposed on its government to show that its budget plan is yielding dividends, The Irish Times reported. With European Central Bank president Jean Claude-Trichet pushing hard for Athens to adopt new budget measures, finance ministers in the wider union backed demands from euro-area ministers for fresh cuts and taxes in four weeks if the current plan is shown to have misfired.

Germany and France have suggested in recent days that rescuing Greece may be necessary to safeguard the euro zone, but both countries may have a more pressing motivation in the move—protecting their own banks, The Wall Street Journal reported. German and French banks carry a combined $119 billion in exposure to Greek borrowers alone and more than $900 billion to Greece and other countries on the euro-zone's vulnerable periphery: Portugal, Ireland and Spain. Together, France and Germany's banking sectors account for roughly half of all European banks' exposure to those countries.

Irish Nationwide has suspended the head of its UK operations as a result of lending practices uncovered by the new management team at the lender, The Irish Times reported. Gary McCollum, who was based in the building society’s Belfast office, oversaw Irish Nationwide’s €4.4 billion UK loan book with Michael Fingleton jnr, the son of the building society’s former chief executive, who worked in the lender’s London office.

South Korea’s state debt is expected to grow by 184 trillion won over the next five years, according to a state-run economic think tank. Two thirds of the state debt will have to be shouldered by taxpayers, The Korea Times reported. According to the Korea Institute of Public Finance, state debt will reach 493.4 trillion won in 2013, up 184.4 trillion won from 2008. The estimation is based on the Ministry of Strategy and Finance's state debt management plan.

The powerful Australian Workers Union has begun a push to force major companies to guarantee full employee entitlements ranking them ahead of all other creditors as it begins its latest round of industrial negotiations with Australia's mining giants, The Australian reported. The push is part of the union's latest round of industrial negotiations with the big miners.